A report in the daily Asahi Shimbun said Softbank was close to a JPY 10bn ($91.7m) deal to buy C&W’s interests in a move aimed at increasing the competitive pressure on incumbent NTT Corp.
An official at C&W’s London headquarters dismissed the report as speculation, adding: We don’t comment on speculation. However, exiting Japan would be consistent with moves by C&W to claw its way back to financial respectability after disastrous expansion overseas.
In March this year, it completed the sale of its US assets, and the sale of its Japanese assets would leave it free to concentrate on building a base among business users in the UK, and its Caribbean operations.
C&W moved into Japan in 1999 when it bought international operator International Digital Communications for $580m. It invested heavily in its operations there and in 2002 it acquired PSINet Inc’s Japanese assets for $16.6m.
However, this spending brought little return. In its last annual report for the year to March 31, C&W said it made an operating loss of 4m pounds on revenue of 286m in its operations in Japan and Asia.
Softbank is prepared to invest heavily to take on NTT and in May it bought Japan Telecom Holdings Co Ltd for $3bn from US buyout firm Ripplewood Holdings LLC, to gain a foothold in Japan’s corporate telecom business.
